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Wednesday, December 03, 2014

Waiting in the Weeds

PERS news has been nearly non-existent for awhile now.  Following the Supreme Court hearing on the Moro et al cases the MSM has gone fairly quiet.  The November election brought about a few changes in the composition of the Legislature, but nothing that should be too concerning.  Most of the Rs running against the Ds got a pretty good shellacking at the polls.  If our re-elected Gobernator is to be trusted, we won’t see any PERS legislation pop up in the 2015 Legislature.  Of course, there are renegade Rs who would love to reopen that wound.  There are many behind-the-scene negotiations and strategizing going on right now.  I think the major concern is how the Legislature will respond IF the Supreme Court overturns some or all of the 2013 Legislation concerning the COLA and the income tax remedy.  Reading the transcript of the hearings reveals some very interesting threads, if you are interested in those sorts of things, that, when pulled, lead to some vexing outcomes.  If the past is any indication of the future, the decision from the Court should come down sometime between now and early March.  That will give the Legislature time to digest and decide how to deal with the rulings, if negative for PERS and the employers.

At the end of November, the PERS Board met and Milliman presented a series of potential outcomes on employer rates for the future.  The good news, for employers, is that rates should continue to fall, and that should reduce the pressure on PERS to find ways to stab retirees and actives in the back again.  Of course, Milliman’s analyses considered only one variable in this complex calculus.  They looked at what happens under varying earning scenarios.  They found that only a 2008-like outcome could produce some nasty changes for the employers.  Otherwise, absent a decline like 2008, the employers come out pretty well through all of this. I didn’t attend the meeting so I don’t know whether the code monkeys at Milliman considered the one variable we’re all interested in.  What happens if PERS and the legislature LOSE on SB 822 and SB 861?  What happens to rates then?  Perhaps that is unconcerning to Milliman.  I recall during the 2013 Legislature hearing former Deputy Director Cleary remarking to one of the actuaries (supposedly out of earshot, but not mine), that whatever happened to the bills, PERS could always cover the reversal out of the contingency reserve.  It sounds like PERS is planning to dig into the contingency reserve to cover the court order restitution, and then ding employers for ongoing costs.  Obviously PERS is not terribly concerned about the outcome since they didn’t ask for a consideration of the employer costs if the bills are overturned.

By this time, most PERS retirees receiving a monthly benefit should have received the legislative spiff to the COLA of $150 (less taxes), and the add-on to that if PERS benefits are $20,000 per year or less.  The checks went out on November 24, post-dated to November 26.  I haven’t heard from anyone who qualifies for both checks, but my check showed up in my bank account on November 26.  If you receive a monthly benefit and haven’t received your “bonus”, please contact PERS as soon as possible.  If you don’t receive a monthly benefit, you aren’t eligible for the bonus.  This will continue each year until 2019.  The bonus does not increase your base benefit.

I expect this to be my last post for calendar 2014.  There simply isn’t enough going on to warrant any more frequent posts.  After the new year, life starts to get interesting again, and posts may become more frequent.

I wish everyone a joyous holiday celebration of the Winter Solstice and good tidings for whatever holiday you celebrate towards the end of this month.  I hope the New Year brings good fortune to everyone and that we can manage to get through an uneventful legislative session.